* Hang Seng down 1.7 pct on week as April gains fade
* Shanghai Composite posts worst week in 2011, down 3.3 pct
* Defensive utility stocks outperform, Power Assets up 1 pct
* Banks see profit-taking after results, Hui Xian slumps on debut (Updates to close)
By Vikram Subhedar and Yixin Chen
HONG KONG/SHANGHAI, April 29 (Reuters) - Hong Kong shares fell for a fourth straight session on Friday and China's markets suffered their worst weekly performance this year as investors cut back on risk heading into a long weekend, fearing Beijing may announce further policy tightening measures.
Defensive sectors outperformed with utilities the top performing stocks in Hong Kong in April, suggesting market players were uncertain about the near-term direction of the benchmark index.
The Hang Seng finished down 0.4 percent, bringing its weekly loss to 1.7 percent. It has fallen over 3 percent since hitting a 2011 high of 24,468.6 on April 8, though it is still up nearly 3 percent for the year to date.
China's main stock index snapped a five-day losing streak, ekeing out a 0.9 percent gain, but ended the week down 3.3 percent on fears that Beijing may announce more policy over the Labour Day long weekend.
China's central bank has often announced major policy changes just before or during holidays.
That caution pushed turnover in Shanghai to a three-month low of 93 billion ($14.3 billion) on the day with analysts wary of reading too much into Friday's slim gains.
"Today is a technical rebound after a 5-day decline," said Chen Shaodan, analyst at China Development Bank Securities in Beijing. "If the index cannot find support from fresh fund inflows or news, it has the potential to fall."
Chinese banking stocks were hit by profit-taking after strong first-quarter results from the largest players, with Agricultural Bank of China down 3.2 percent in Hong Kong and off 0.7 percent in Shanghai.
AgBank is Hong Kong's top performing large-cap banking stock this year, up 17 percent compared with a 3 percent gain for the financial sub-index .
China's top banks posted market-beating profits on the back of interest rate hikes but some analysts raised concerns that banks could be forced into raising more funds if regulators hike capital requirements. [ID:nL3E7FS29B]
Also, the earnings beats came mainly from non-interest income, primarily fees, which may disappoint some investors who were looking for a strong sequential pick-up in net interest margins, said Ming Tan, bank analyst at Yuanta Securities.
UTILITIES SHINE, YUAN IPO TUMBLES
Utility companies led the charge on expectations of huge power demand in China this summer with market players anticipating shortages to drive up prices.
An Hui Wenergy rallied by its 10 percent daily limit and Huadian Power International jumped 9.8 percent. In Hong Kong, Huaneng Power rose 2.6 percent while Power Assets , previously Hong Kong Electric Holdings, rose 1.1 percent.
The utilities sub-index in Hong Kong is up 2 percent this month, making it the top performer amongst sectors.
Steel makers outperformed after China Iron & Steel Association (CISA) said steel demand was expected to rise from 2011 to 2015. [ID:nL3E7FT03U]
Almost all steelmakers listed in the Shanghai and Shenzhen markets rose, while Henan Hengxing Science & Technology jumped its 10 percent daily limit and Wuhan Iron and Steel rose 2.7 percent.
On the flipside, Hong Kong property counters extended their weak run after the Hong Kong Monetary Authority once again issued a warning to local banks on excessive lending. [ID:nL3E7FS383]
A statement from the HKMA's chief that interest rates in Hong Kong could rise before the United States are seen as a further sign that authorities are looking to keep a lid on property prices and lending.
The property sub-index fell 0.4 percent and is down 2.2 percent this month, the worst performing sector in April.
Hong Kong's first yuan-denominated IPO tumbled 9 percent on its Friday debut as investors turned their noses up at the low yields offered by billionaire Li Ka-shing's Hui Xian real estate investment trust. [ID:nL3E7FT03X]
(Editing by Kim Coghill)